Salaried physicians: Barriers and benefits

The health care reform debate has at times focused on the salary models that some nonprofit hospitals such as the Cleveland Clinic and the Mayo Clinic used.

Doctors in Nevada can work out of for-profit hospitals, but because of the corporate practice of medicine doctrine, can’t be an employee, said Larry Matheis, executive director of the Nevada State Medical Association.

For a for-profit corporation to employ doctors, it would have to be licensed to practice medicine as a doctor is.

Doctors can, however, be employed at nonprofit hospitals.

The American Medical Association created the rule to protect patients and physicians from influences from the corporate level, he said.

The biggest impediment is that there simply aren’t enough doctors for hospitals to hire, he said.

“The universities aren’t churning out enough specialists,” he said. “It’s a workforce challenge more than a law challenge.”

In Las Vegas, hospitals contract with doctors to provide care at their facilities — even the nonprofit hospital group St. Rose Dominican Hospitals contracts with about 1,200 doctors instead of keeping them on staff.

St. Rose spokesman Andy North said the group hasn’t explored the option of hiring doctors, but depending on how health care reform shakes out on the national level, it may reconsider.

The only doctor on St. Rose’s staff is the chief medical officer as a member of the administration. That person doesn’t practice medicine at St. Rose.

State and federal laws will have to be changed to allow doctors and hospitals to integrate services and payment models, according to a report in June by the Healthcare Financial Management Association.

“The issue of hospital-physician alignment is coming to the forefront of the health care payment reform debate because neither hospitals nor physicians alone will be able to improve processes across the continuum of care and enhance the efficiency of health care system performance.”

But in the study, doctors surveyed stressed that the large-scale employment of physicians is a “costly proposition.”

Sunrise Health, parent of Sunrise, MountainView and Southern Hills hospitals, said it supports a change in the interpretation of the physician employment law.

“The ability to employ physicians would help us combat the low reimbursement rates we face in Las Vegas,” a Sunrise Health statement said. “With some of the lowest reimbursement rates in the country, it can be difficult to recruit needed physicians to Las Vegas. With physician employment, we can more aggressively recruit physicians with guaranteed salaries and benefits. This is especially important in recruiting unique subspecialists, for example at Sunrise Children’s Hospital.”

Rural communities would also benefit from employed physicians, the statement said. The communities “have a hard time bringing primary care physicians to their service area. With physician employment models they have a greater opportunity to create demand for these positions. Physician employment is one more tool in the tool kit we can use to continue to meet the health care needs of our community.”

Insurance companies can in a roundabout way employ doctors if they are part of a health maintenance organization providing the care, such as Southwest Medical Associates, run by Sierra Health Services, a UnitedHealthcare subsidiary.

The majority of doctors the company employs are paid an annual salary and receive quarterly bonuses based on their productivity, customer satisfaction and quality of care, Southwest Medical CEO Michael Coleman said.

The main benefit for the employed physicians is that they don’t have to worry about running a business, he said.

“They can concentrate on practicing medicine,” he said.

This model is especially attractive to the new generation of doctors leaving residencies who are seeking a quality of life standard that allows for a set schedule rather than long hours and being on call, Coleman said. Doctors who are entrepreneurial, though, wouldn’t fit in the salary model, he said.

The salary model benefits the company because it allows Southwest Medical to promote its culture as high quality while remaining cost-effective, Coleman said.

At Cleveland Clinic, doctors are paid a salary — beneficial to both the clinic and the physicians, said Dr. Michael Modic, chairman of the Neurological Institute at Cleveland Clinic.

“For us, there’s no financial incentive to do more tests, to do more surgery,” he said. That gives doctors the freedom to focus on patients.

“We like to think that ... we’re judged on the quality of our care and the access people have to us, not how much care we give in terms of numbers of tests,” he said. “You’re really incented to do the right thing. It helps us in terms of how we develop the care of the patient and the pathways that we employ.”

There is a downside to paying doctors a salary, and those are the incentives doctors are offered.

“It’s part of the economic fabric of the country,” Modic said. “It’s difficult sometimes for physicians who join the Cleveland practice to realize that, ‘Gosh, I’m not paid for how much I do, I’m paid for how well I do it.’

“The danger there is ‘Well, if I’m not paid for how much I do, I’ll just do a little bit.’ But, in our environment, the peer pressure would prevent that from ever happening because everybody (who) comes here comes to work.”